When should a SaaS startup raise money

When should a SaaS startup raise money?

Source: here

“In general, hiring before you get product/market fit slows you down, and hiring after you get product market fit speeds you up. Until you get product/market fit, you want to a) live as long as possible and b) iterate as quickly as possible.”

- Sam Altman

Ever successful business grows through 3 stages:

1. Search for Product-Market Fit
2. Growth (best to raise money here)
3. Maturity

When you're fairly confident that the business has product-market fit, your focus shifts to getting your product into people's hands. This stage is where funding can be most valuable – with accelerating hiring, allowing you to invest in paid growth channels and/or a sales team, and with practical things like a large office space.

“When should a profitable company raise capital, if ever? The answer is the same for all businesses regardless of financing history: Raise capital when you are confident that you can use it to attain a higher growth rate and the higher growth rate is worth a trade-off in dilution. Higher growth rates increase the value of a business. Higher growth rates fetch greater multiples.”

— Tomasz Tunguz